I like Google Documents b/c changes can be suggested in the comments, and also b/c the editor and writer can work in a 'live' online format.
When I edit, I only highlight areas that need work and suggest rewrites. When I'm being edited, I hate it when and editor changes anything w/o discussing first, especially if an editor decides to rewrite sections. A good editor not only helps make the story better, but challenges the writer so the writer becomes better as well.
"He's not dead, he's metaphysically challenged."